Gold (AUX) Analysis: Steady Above $1,900 Following Chairman Powell’s Speech and President Trump’s Condition
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Key Takeaways:
- Anticipation for Federal Reserve Chairman speech
- Cash injection needed to boost the US economy
- President elections likely to impact market sentiments
Gold is trading to the upside this month with an open at $1,885 on Oct 1. Gold is currently hovering around the $1,910 mark with low trading volumes as market participants are anticipating to hear the Federal Reserve Chairman Jerome Powell speak later today at the National Association of Business Economic annual meeting.
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This month’s move up until the present point at $1,910 may not seem significant. However, in the long-run the yellow metal has been in a long-term uptrend since its lowest point in the last 5 years reached on Dec 3, 2015, when gold briefly traded at $1,046. The trend led to an all-time high of $2,075 made on Aug 7, 2020.
Yesterday gold saw an uplifting along with US stocks amid hopes for another fiscal stimulus to aid the US in its path towards economic recovery. President Trump, who was discharged from hospital yesterday evening, along with House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin agreed that the US economy is in need of another cash injection to bring liquidity and stability into the markets.
As a result, the US dollar retreated yesterday and gold saw a two-week high of $1,920. Which was later trimmed down to a daily closing of $1,912.
So far today gold is still trading in the same region. Traders and investors are waiting for Chairman Powell to address fundamentals subjects, such as the pace of recovery, economic challenges, implications for monetary policy, and the issue at hand, aiding the US economy through an additional fiscal stimulus.
Upcoming US Presidential Election Influencing the Market Sentiment
President Trump’s health will most likely also play a role in the direction that gold will take. According to Trump’s doctor, Sean P. Conley, although the President is back at the White House, he is not yet “out of the woods”. Dr. Conley made it clear that Trump is still contagious and it would take at least a week of monitoring his condition to indicate improvement. Trump 2020 Communications Director Tim Murtaugh informed the public that President Trump intends to show up at the next debate on October 15. This event will also be closely monitored as its outcome will arguably have a significant effect on the presidential elections and the overall market sentiment.
On the longer-term horizon, it might be wise to ensure protection from any surprising events leading up to the US presidential elections on November 3. In this light, a continued consolidation will be a healthy move for the safe haven as a way to keep the trendline alive.